CLERGY SAID TO MISUSE AID TO INDIA

By Steve CollBy Steve CollMay 25, 1990

NEW DELHI, MAY 24 -- An audit by a U.S. accounting firm has turned up evidence that some bishops, priests and nuns within India's Roman Catholic Church could have "misused" millions of dollars worth of U.S. government food donated to feed malnourished mothers and children on the subcontinent, according to U.S. officials.

Indian Catholic officials, who receive about $25 million in free U.S. food each year to feed India's poor, have used short-weighing measuring devices for distributing food, created false lists of food recipients, improperly used donations to support commercial businesses, and deliberately concocted inaccurate records to hide abuses, according to the report by Price Waterhouse, the accounting firm asked to audit the food program by the U.S. Agency for International Development (AID).

The audit report stops short of charging the bishops, priests and nuns involved with outright theft but concludes that the food relief program they administered "was operated in an atmosphere whereby the commodities could be misused with little risk of detection."

U.S. officials, who asked not to be identified, said that a definitive judgment about whether Indian Catholic officials have deliberately stolen large amounts of U.S. food was beyond the scope of the Price Waterhouse audit, which omitted the names of any individuals involved. But they said the evidence uncovered by the audit suggested to them that significant theft and corruption had occurred.

The audit report also chastises the large, Baltimore-based charity, Catholic Relief Services (CRS), for failing to monitor closely the distribution of U.S. government food and the activities of the Indian church officials who receive it. U.S. officials said they are reviewing whether the relief organization should be allowed to continue as a sub-contractor in the U.S. AID food program in India, which is the biggest U.S. food relief program in the world.

Catholic Relief Services has sharply disputed the audit's findings. In a letter to AID responding to the final draft of the Price Waterhouse report, the Catholic organization said the audit's conclusions "are based on factual errors, speculation and, at times, misrepresentation." It said Price Waterhouse had unfairly extrapolated the violations of a few churches and convents into an indictment of the entire Indian Catholic relief network.

"We admit the management is weak, but I don't think there is widespread abuse in the program -- definitely not," said James deHarpporte, chief of the CRS program in India, in an interview. "Do you think Mother Theresa is corrupt? . . . I'm not saying the Catholic Church is perfect. I'm not saying that because we work for the church, we don't need to monitor . . . but I don't lack confidence in the church."

While it represents less than 2 percent of the country's largely Hindu population, India's Catholic Church membership numbers 13.4 million. The church has played an important role in spreading literacy in India and has established a significant network of social welfare programs.

In interviews, U.S. officials disputed the Catholic organization's position on the food program audit, saying they believed the problems in the church uncovered by Price Waterhouse were serious and widespread.

These officials pointed to a finding in the audit report that at 79 out of 84 Catholic food distribution centers inspected in southern and central India, measuring devices used to hand out rations to the poor gave short weight, providing recipients 15 to 20 percent less food than was allocated by AID. Price Waterhouse estimated losses from inaccurate measuring devices at between $3 million and $4 million during fiscal 1987 and 1988.

All of the inaccurate measuring devices inspected by Price Waterhouse gave short weight and none was overweighted, according to U.S. officials, suggesting that the devices may have been deliberately fixed to skim off U.S. government food.

During the audit, according to Price Waterhouse, one Indian priest at a major distribution center arranged sacks of food in a warehouse to make it appear that the warehouse was full. But when auditors ignored the priest's assurances that everything was in order and climbed on top of the bags, they found that he had constructed walls of bags with a hollow center and that a large amount of food was missing, apparently sold for cash on the open market.

CRS said the apparent widespread use of short-weighing devices could be explained by confusion over recent changes in the amounts of certain foods that are supposed to be doled out to malnourished mothers and children. CRS officials also said that other problems described by Price Waterhouse could be attributed to poor bookkeeping, rather than theft.

"Maybe people didn't keep records according to Price Waterhouse's Fortune 500 standards," deHarpporte said. "But if you judge poor people by the standards of the rich, by the standards of the Fortune 500, then the poor will always remain poor."

U.S. officials said they were unpersuaded that the errors identified in the audit were largely innocent, as CRS has claimed. "There may be some small instances of poor record-keeping," said one U.S. official. "But with the amount of supplies that are missing -- you need to have an army to move that amount of food."

In its report, Price Waterhouse said it was impossible to determine exactly how much of the food donated through CRS to missions, convents and churches around India had been lost, misused or stolen, but it estimated that millions of dollars worth of U.S. food may have been involved. Catholic institutions in India that distributed $1.9 million worth of U.S. donations during 1987 and 1988 already have been shut down because of proven violations, the report said.

The food program audited by Price Waterhouse is part of a worldwide food relief effort administered by AID, which donates surplus U.S. supplies to governments and private relief groups in impoverished countries. The program in India is AID's largest, involving more than $100 million worth of food donations annually, including the cost of shipping.

The food is badly needed. While famine has been largely eliminated on the Indian subcontinent because of advances in agricultural technology and the efforts of the Indian government, as many as one-half of India's 820 million people live in poverty, according to United Nations' estimates. The country's high rates of infant and child mortality are attributed by development specialists to chronic undernourishment among mothers and children, especially in the countryside, where most Indians live.

About two-thirds of the U.S. food donated free to India is distributed to malnourished mothers and children by the U.S.-based charity CARE. The rest is distributed by CRS.

CARE is also being audited by Price Waterhouse, but while the audit is not yet final, U.S. officials said they have no indications of serious problems with the CARE program. CRS's food distribution is divided between the program targeting poor mothers and children and one that attempts to use food donations to foster small-scale development in rural areas, called the Food for Work program.

Price Waterhouse said it uncovered numerous problems in the Food for Work program, including instances in which donated supplies were paid as wages by landlords to workers to develop private property and one case in which food wages were used to support a highly profitable brick kiln, in violation of AID regulations.

Senior officials from the Baltimore headquarters of CRS, which is the overseas arm of the U.S. Catholic Conference, are now in India working on a blueprint for changes in their program in the hope that they can persuade AID to continue with government donations to the charity. U.S. officials said a decision on whether to continue will not be made for at least several months.